NdFeB industry: demand-pull value of the leading enterprises show growth

In the "green energy" and "slim and light" demand growth environment, NdFeB logic clear long-term growth industry; and the current supply and demand in the industry are contributing to rising prices. In this case, the value of industry leading companies will be gradually reflected.
    Requirements: "energy saving, thin and light"

2010 global permanent magnet market yield of about 100 tons, of which about 900,000 tons annual output of ferrite, NdFeB annual output of 100,000 tons, accounting for only 10% of total output. If at current prices, the global NdFeB market about 80 billion U.S. dollars. NdFeB permanent magnets because of light weight, small size, strong magnetism and many other advantages, has been gradually replaced ferrite magnets, NdFeB magnets physical alternative hypothesis of 50% ferrite magnet, its output value will reach one thousand billion from 2001 to 2010 decade, increased demand for NdFeB five times more than sufficient to show NdFeB is still a sunrise industry.

Traditional applications (speaker, magnetic separation, permanent magnet motor, VCM, MRI, etc.) has a high market penetration, demand in a stable growth period, the annual growth rate of 5% -10%; and new applications (wind power, inverter air conditioner, energy-saving elevator, hybrid vehicles, motor vehicle steering EPS) is to promote the development of NdFeB industry, the main driving force.

NdFeB ferrite replacement drivers from three aspects: First, the equipment, "slim and light" demand, NdFeB has high energy, high-density advantages, the same neodymium magnetic ferrite volume of 1 / 10, its volume is 1 / 6, NdFeB ferrite alternative to consumer electronics miniaturization, lightweight, thin, it is widely used in hard disk VCM, DVD drive, cell phone motor and electro-acoustic devices. As consumer electronics manufacturers the size of the device first, and NdFeB accounted for the low percentage of total equipment cost, so the demand for small rigid; second is the "high energy" demand, NdFeB has a very high energy product and coercivity force, is the highest magnetic properties of magnetic materials in a, it is widely used in electrical, automotive, power tools, MRI, magnetic, electro-acoustic field, the total downstream NdFeB a higher proportion of total equipment cost, and equipment size requirements are not very high, so the manufacturers to weigh the cost-based, the demand for a certain irreplaceable; third is the "energy saving" demand, NdFeB in the field of new energy and energy saving applications at the same time and energy on the small environmental merits, the application field of wind power, energy-saving elevator, electric bicycle, new energy vehicles, EPS, etc.. These areas, the initial set NdFeB equipment while the cost is higher but the value of long-term saving more prominent, so the demand for greater rigidity.

Supply: Competition pattern optimization

Supply and competition, the existence of three factors have contributed to NdFeB manufacturers to raise prices. First, in the rare-earth policy, driven by the upstream raw material supply constraints inhibiting the production of downstream out. According to China's rare earth oxides in 2011 and can strictly enforce mining index calculation, China NdFeB manufacturers can only supply 55,000 tons, 100,000 tons less than last year, global demand, supply and demand imbalance; Second, the high-end master NdFeB patent the hands of five companies in the country, patent barriers limiting the domestic production of NdFeB other out, and master manufacturers the patent out without substantial capacity planning; Third, NdFeB properties different from the semiconductor industry, panels, etc. industry, NdFeB manufacturers accounting for depreciation costs accounted for 3%, while semiconductor, panel depreciation accounted for 20% of the NdFeB firms, profitability important than the capacity utilization.

As China's largest suppliers of rare earth (accounting for 95% of the global supply of rare earth), started in 2010 will total control of the supply of long-term lower demand: in 2011 the National Rare Earths (Rare Earth Oxide REO) exploitation of the total control index for the 93 800 tons, of which 80,400 tons of light rare earth, rare earth 13,400 tons of heavy, 5% more than last year. But last year the actual exploitation of REO about 12 million tons, 30% higher than the actual. This year the government emphasis on strengthening the overall control and supervision, according to the expected total control objectives, namely, the supply of this product NdFeB magnets more than 20% decline over last year. 2015 the total global supply of rare earth will reach 15 million tons, 11 percent compound annual growth rate, lower than demand growth, so the prices of rare earth bullish.

Majority of the world supply of rare earth from China. Over-exploitation due to the long, metal praseodymium neodymium price suppression in the 10 million -20 million / ton ranges, this year, with the continued introduction of rare-earth policy, supply-constrained role began to emerge, beginning March 6 times of rapidly rising prices, even if short-term price correction in the long-term imbalance between supply and demand situation does not change the upward trend. Praseodymium metal has been widely used as the prospects of rare metals, ten years the price rise itself is not unreasonable, during which copper prices rose more than five times.

At present, China NdFeB has reached more than 100 manufacturing enterprises, domestic enterprises have NEOMAX five patents of NdFeB (tricyclic, Yunsheng, Kyocera, Aetna, Bank of sodium). As the MQ powder monopoly, the monopoly of raw materials to maintain a high magnetic long-term price, MQ magnet magnetic total price of the share price has more than 60%, plus other material costs about 10% -20%, so the company's gross margin of 30% more generally in the 15% margin, the other companies did not patent the five companies need to pay 10% of the agency fee to the name of several companies which export, and small businesses is only about 10% profit margin, high agency fees makes it impossible to products exported to international markets, and limited the decline in the price of bonded NdFeB magnets. For a long time, patent restrictions have restricted the development of the industry in China NdFeB biggest bottleneck.

 In the process of internationalization, leading manufacturers will benefit the most, for three reasons: First, channel barriers. Leading manufacturers have many years experience in overseas marketing, a good marketing channels, and access to downstream manufacturers certification. Export products must meet strict quality foreign customers, technical and environmental safety standards, to obtain accreditation, especially in Japan electricity production, SONY, JVC, LG, Panasonic, Samsung and other large customers demanding the stability of the product, and only reach a certain capacity size, quality has been recognized by leading firms in the long-term it may enter; second raw material quota barriers. Limit in raw materials, the ability of the leading manufacturers greater access to resources, and to limit others production carve out; Third, technical barriers. Compared with the Chinese market, foreign demand for the major markets for high-performance NdFeB greater, as shown in Figure 35, the Japanese market demand mainly in the energy-saving motor, VCM, MRI and other high-end, while the domestic small and medium manufacturers are concentrated in low-end market, technological backwardness, so technical barriers to enter the overseas market is the one major obstacle.

Price: follow the market

From March this year, NdFeB products to reflect market pricing model method, that new orders in the price at the moment of rare earth NdFeB cost plus a margin determined. In this pricing model, the NdFeB rapid price increases, price increases since March 6 times, a record high, indicating high quality NdFeB enterprise bargaining power.

Pricing model change significantly enhance the flexibility of the company's performance, one times sales price growth in profit margins remain unchanged, a substantial increase in gross profit also will be several times; the second is in the process of price increases, labor costs, utilities costs, depreciation costs and period costs are fixed, in a significant scale, the expense ratio decreased to enhance the net profit margin; third NdFeB business inventories in six months or so, take follow the market laws, value stocks significantly upgrade.

Supply and demand imbalance is the fundamental logic of price increases, while the apparent value of the leading manufacturers. There's not only short-term performance NdFeB outbreak, but also presents long-term growth. Into the upstream industry chain of rare earth NdFeB material suppliers, manufacturer of NdFeB magnet middle and downstream terminal manufacturers. NdFeB manufacturers divided into two categories, one oxygen magnet manufacturers, such as the Hengdian East magnetic, Jiang powder magnetics, Tiantonggufen etc., and the other is a manufacturer of NdFeB, Sintered NdFeB is divided into its manufacturers, such as Zhong Ke San Huan, Ningbo Yunsheng, Advanced Technology, is the sea magnetics, as well as bonded NdFeB manufacturers, such as the Galaxy magnet.